Africa’s opportunity

As African leaders meet with US President Barack Obama this week, economies across sub-Saharan Africa are humming with average GDP growth of over six per cent, fuelled by increased export earnings and growing consumer demand. Is this Africa’s century?

Since the start of the millennium, trade between sub-Saharan Africa and the rest of the globe increased by 200 per cent. Between 1995 and 2012 exports leapt from US$68 billion to more than US$400 billion, and though US$300 billion came from multinational exploitation of natural resources—oil, natural gas, precious metals and diamonds—there is rapid growth in other sectors.

Over the past decade, manufactured output has doubled. The African Development Bank projects foreign investment in Africa would reach a record US$80 billion this year, with a larger share of the money going to manufacturing.

“The development is real”, says Simon Freemantle, a senior political economist in Johannesburg.

Not since the departure of the colonial powers 50 years ago has there been such optimism for Africa. Most countries are at peace, children are attending school in record numbers, the AIDS pandemic has been tamed and people are living longer.

And the development is percolating to the people, for the middle class is growing, maybe not by OECD standards, but approximately 225 million people moved from poverty to lower middle-class status over the last two decades. “The future is about that lower middle that’s expanding quickly,” said Staffan Canback, managing director of a consultancy doing business in Africa. At the start of this year, 51 per cent of middle class South Africa is black and 32 per cent white; when in 2004, whites were 52 per cent and blacks, 32 per cent. Today the black middle class spends more than the white.

And evidence of a consumer market abounds. Enormous shopping malls spring up; Wal-Mart, as Massmart, has stores in a dozen African countries and plans expansion into others; Honda opened its third motorcycle subsidiary in Africa; Heineken will invest US$700 million a year and Coca-Cola a total of US$5 billion; and there are more cars on the roads, greater foreign travel and cellphones are everywhere.

But much remains to be done. Poverty and hunger are widespread as Africa’s population grows and will double to two billion by 2050; there is an uneven spread of wealth; an mala­ria persists while Ebola spreads.

Also, the continent is not completely free of conflict, as fighting continues in southern Sudan and the Central African Republic, while violent extremism plagues Nigeria, Kenya, Mali, Somalia and Uganda.

And there is still a draining of the continent’s wealth. According to the Overseas Development Institute, Africa is losing US$192 billion annually “through illicit financial flows, pro­fits removed by multinational companies, debt payments, the brain drain of skilled workers, illegal logging and fishing, and the costs from climate change”.

So Africa cannot afford to be complacent. There must be wealth gene­rating investment in social and physical infrastructure and elimination of bureaucratic impediments to investment and productivity. The entrepreneurial talent in Africa has risen from slumber and needs a facilitative environment to truly flower.

And there must be good governance. Helen Epstein in the New York Times, says there is “a spectre of impunity haunting Africa” with many countries “in the grip of corrupt, repressive tyrants”. She wants America to stop “lavishing billions of dollars in military and development aid on African states while failing to promote justice, democracy and the rule of law”.

This first-ever US-Africa Summit is an opportunity to advance good governance. Obama must make a real effort since America’s role on the continent has been reduced compared to China, which doesn’t ask questions about democracy and human rights but whose trade with Africa has grown 20-fold since 2001 and which “invests money while America holds receptions”, according to a standing joke among African leaders. The US is getting the message. On Tuesday, President Obama announced U$15 billion of American investment going to Africa.

The first black US president, son of a Kenyan economist, should also help to reignite the spirit of Pan Africanism for deep political and economic collabo­ration among nations on the continent. The World Bank says Africa could produce enough food to feed itself. I also like the idea of a common market stretching from the Mediterranean to the Cape of Good Hope. Think of the wealth that could be created through trade and investment, wealth for improvement of the people and the influence of Africa in global affairs. Think of Africa rising. This is the opportunity.